Report on independent assessment of Chorus’ financial position released

Communications and Information Technology Minister Amy Adams has today released the final report from Ernst & Young Australia on whether Chorus can deliver on its broadband contracts.

The Ministry of Business, Innovation and Employment commissioned Ernst & Young Australia to investigate Chorus’ capability to deliver on its Ultra-Fast Broadband (UFB) and Rural Broadband Initiative (RBI) contractual commitments with the Government, in light of the Commerce Commission’s decisions on final wholesale prices for copper-based broadband services.

The independent report confirms the high level findings that were announced by the Government on 5 December.

“Copper price changes will have a significant impact on Chorus’ financial position, and the wide range of actions that Chorus can consider taking itself will not be sufficient to cover the funding shortfall to safeguard the UFB and RBI build commitments,” Ms Adams says.

“The report confirms the initial figures released by Chorus about the impact of copper price changes on its financial position, and lays to rest claims by some that the figures were overstated.”

The report finds that Chorus could reduce the estimated funding gap from $1 billion to between $200 million and $250 million by implementing a number of cash flow savings initiatives.

“The Government remains committed to the UFB and RBI programmes and now we can get on and ensure that faster broadband is rolled out to New Zealanders.”

Crown Fibre Holdings (CFH) and Chorus have now begun discussions about possible adjustments to Chorus’ UFB contracts to help close the funding gap.

The Government’s UFB initiative has a budget of $1.35 billion and CFH is required to act within this fiscal envelope.

“The Government expects Chorus to meet a significant part of the shortfall.

“The Government will be monitoring closely the progress of discussions between CFH and Chorus.”